Ladbrokes is in talks over a merger with fellow high street bookmaker Gala Coral, as the industry continues to grapple with the boom in online gambling. But it hasn’t gone all in just yet.
The tie-up could rival Britain’s biggest bookie William Hill, although no price has been put on the potential deal at the moment. Ladbrokes has 2,484 stores in the UK and Ireland and 1,192 in Spain, but is planning to close 60 this year. Gala Coral has 1,800 UK shops, 780 in Italy and 132 Gala bingo halls, which it started trying to sell last year.
Ladbrokes has been struggling of late. Jim Mullen took over as chief executive in April, with a mandate to shake up the business. One of his first tasks was to announce first quarter profits had more than halved to £14.3m compared to the previous three months, as a hike in gambling taxes and results that didn’t go their way took their toll. But while footfall has been dropping across its shops, its digital revenues and profits soared 22.9% and 70.7% respectively.
‘Since becoming CEO my focus has been on a more aggressive plan to build digital scale and grow our recreational customer base across all channels, which is key to creating a more sustainable and growing Ladbrokes,’ Mullen said, in a statement rushed out after the plans were reported by Racing Post.
‘My plans are well advanced and I look forward to presenting them to shareholders.’ (He’s making relatively quick work of a new strategy, but it looks like the press still jumped the gun on him.)
Gala, for its part, had been considering a post-General Election IPO before Ladbrokes came a-wooing. The private equity-owned gamer raked in pre-tax profits of £108.7m in the half year to April 11, after a £37.6m loss the previous year.
Ladbrokes warned ‘there can be no certainty’ the deal will go ahead, and claimed its board ‘has not yet concluded whether a transaction is strategically attractive’. That didn’t stop investors putting money on the merger going through: its shares were up almost 12% to 136.5p in mid-morning trading, having tumbled almost 36% in the last two years. Now the cat’s out the bag, Mullen wouldn’t be off to a good start with shareholders if he didn’t go all in.